Yahoo Finance An Interesting Alliance: Macy’s Partnership with Best Buy
Macy’s Looks at New Alliances and Businesses to Grow Sales
Best Buy within Macy’s
On September 8, Macy’s and Best Buy announced their agreement to test consumer electronics departments in Macy’s stores. In early November 2015, Macy’s (M) will open licensed Best Buy (BBY) shops within ten of its stores.
On September 8, Macy’s and Best Buy share prices rose by 1.3% to $59.17 and 2.9% to $37.70, respectively.
Details of planned stores
The planned Best Buy shops within Macy’s stores will be ~300 square feet. These Best Buy shops will be staffed by Best Buy employees. The stores will display Samsung smartphones, tablets, and smartwatches, audio devices like Bluetooth speakers and headphones, and accessories like chargers and cases from Samsung and other brands.
Macy’s and Best Buy might open more stores based on the response to these pilot stores. This deal will help Macy’s expand its product assortment. It will also expand Best Buy’s footprint in the United States. Best Buy’s turnaround efforts have been showing results in recent quarters. Best Buy beat analyst sales and earnings estimates in 2Q15.
Macy’s and Best Buy together constitute 0.3% of the portfolio holdings of the iShares S&P 500 Value ETF (IVE) and 1.1% of the Vanguard Consumer Discretionary ETF (VCR).
Electronics merchandise
Sears Holdings (SHLD) sells consumer electronics like smartphones and tablets through its Sears and Kmart stores. Department stores like Nordstrom (JWN), JCPenney (JCP), and Dillard’s (DDS) sell home appliances like blenders and coffeemakers, but do not deal in consumer electronics like smartphones and tablets.
Macy’s partnership with Best Buy will help the company offer a key and popular merchandise category. An assortment of consumer electronics will be compelling, especially during the upcoming holiday season when many consumers buy smartphones and other electronics.
In the 2014 holiday season of nine weeks ended January 3, 2015, Best Buy’s sales rose by 2.1% to $11.4 billion. The company reported domestic comparable sales growth of 2.6% in the holiday season, excluding the estimated benefit of installment billing.
For a detailed overview of Macy’s and Best Buy, read our series Macy’s: What investors should know about the largest department store and Your investor’s guide to electronics retail giant Best Buy.
In part two of this series, we’ll discuss how Macy’s might benefit from the growing demand for consumer electronics.
Browse this series on Market Realist:
